Canada's federal government may consider raising the minimum down payment requirement from its current 5 percent and shortening the amortization period to less than the current 35 years.
This news comes from Finance Minister Jim Flaherty and may have a significant effect on Kelowna's housing market as well as other markets across the country.
The low down payment requirement along with record low interest rates has opened up the housing market to many first time buyers.
This has helped the industry rebound but is causing some concern among analysts because of the hot markets in some areas such as Vancouver.
There is worry that a downward turn in the economy might cause a housing crash.
The Mortgage Brokers Association of British Columbia has also issued a statement that the ratio of mortgage debt to income is at record levels.
Roughly 40 percent of home buyers are also passing up fixed rate mortgages in favour of variable rate mortgages.
As long as interest rates remain low, this might be a good move, but once rates start creeping up, homeowners may be in for a surprise.
The Bank of Canada is expected to be released from its promise to keep interest rates stable in mid 2010.
Interest rates are then expected to rise to normal levels, which before the economic tumble were in the neighbourhood of 6 percent.
In Kelowna, the average entry level home price is $400,000.
For every $100,000 borrowed at the current 2.
25 percent that is subject to a new 6 percent interest rate, the payments increase by $212 per month.
That means an extra $850 per month being added to that house payment.